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A Big Mac Costs $4

Question 78

Multiple Choice

A Big Mac costs $4.00 in Canada and 9.00 reals in Brazil.If the exchange rate is 2 reals per dollar, purchasing power parity predicts that


A) the dollar is undervalued.
B) the dollar is overvalued.
C) the real is undervalued.
D) the dollar is at the value predicted by purchasing power parity.
E) both B and C are correct.

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